Mozambique: Inflation to rise to 3.1% in 2024, 4.9% in 2025 – consultants

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Mozambique: Inflation to rise to 3.1% in 2024, 4.9% in 2025 – consultants

2:02 CAT | 28 Nov 2024

File photo: Lusa

Oxford Economics predicts that inflation in Mozambique will rise from 3.1% this year to 4.9% in 2025, based on the gradual devaluation of the metical and increased pressure on food prices.

“We forecast that the average inflation rate will increase from 3.1% this year to 4.9% in 2025, based on our assumption that the central bank will gradually devalue the metical over the next year and that upward pressure on food prices will continue in 2025”, write analysts at Oxford Economics.

In a comment on the drop in the reference interest rate by the Mozambican central bank, announced this week, the African department of Oxford Economics points out that “the Bank of Mozambique should lower the MIMO rate by a further 50 basis points in the first half of next year, and should maintain the rate for the rest of the year due to growing inflationary pressures.”

The Monetary Policy Committee (CPMO) of the Bank of Mozambique announced on Wednesday a new drop in the monetary policy interest rate, called MIMO, from 13.5%, in force since the end of September, to 12.75%.

“This decision is supported by the continued consolidation of single-digit inflation prospects in the medium term, despite the uncertainties regarding the duration of post-election tension and its impact on the prices of goods and services”, he explained in a statement. the Bank of Mozambique, after the CPMO meeting, which takes place every two months.

The basic interest rate has been fixed at 17.25% since September 2022, following intervention by the central bank, which then began consecutive cuts from January 31, when it was reduced to 16.5%. On March 27th it was cut to 15.75%, on May 27th to 15%, on July 31st to 14.25% and on September 30th to 13.5%.

The next Committee meeting is scheduled for January 27th.

Source: Lusa